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Pacifico v. Pacifico

A-5880-02T2 (N.J. Super. App. Div. 2004) (Unpublished)

CONTRACTS; DIVORCE —Where there are conflicting proofs as to the meaning of a property settlement agreement concerning the disposition of real property, a court should hold a plenary hearing.

The final judgment of a couple’s divorce incorporated a property settlement agreement. The agreement permitted the wife to reside in the marital home provided that she paid the mortgage and property taxes, but allowed the husband to claim income tax benefits attributable to the wife’s payment of the mortgage interest and property taxes. The agreement further provided that that husband would pay child support and alimony, and that the home would be sold when the youngest child reached the age of nineteen. The wife was given the option to purchase the husband’s interest. If she chose not to exercise the option, the husband would be able to purchase her interest. If neither chose to buy the other out, the house would be sold. The agreement did not set the price at which the wife could buy out the husband’s interest.

Seven years later, after the couple’s son turned nineteen, the husband filed a post-judgment motion asking the house to be listed and sold to a third party. The wife filed a cross-motion to require the husband to sell his interest in the property to her based on the market value of the home when the property settlement agreement was first signed. She argued that the parties had agreed that in return for her paying all of the carrying charges on the house while she lived there and allowing the husband to take the tax benefits, she would be permitted to buy the husband’s interest at the value of the house on the date of the divorce. In addition, she contended that the parties had obtained a broker’s market analysis to determine what the house was worth for the purposes of a future buy-out.

In response, the ex-husband denied that the parties agreed that the house could be bought for its original market value. He argued that his ex-wife had agreed to pay the carrying costs on the house because she was living in the house, and that he was permitted to take the tax benefits in exchange for his agreement to pay child support and alimony. He also contended that they obtained the broker’s analysis because they were considering selling the house at the time, not because they intended to fix the wife’s future buy-out price.

Without holding an evidentiary hearing, the lower court ruled in favor of the ex-husband. It concluded that the agreement required the wife to exercise her buy-out option at the house’s current market value. The Appellate Division disagreed, holding that the agreement was ambiguous in that it did not specify the price or value at which either party could exercise his or her buy-out option. The parties had offered conflicting proofs concerning the proper construction of the buy-out provision and the purpose of the broker’s analysis. The Court concluded that a factfinder might reasonably find that the agreement should be construed as the wife contended. Therefore, the Court reversed the lower court’s decision and remanded the case for a plenary hearing to be determine what was intended by the property settlement agreement.

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